Exclusion of Military Basic Allowance for Housing for LIHTC Properties

While the exclusion of the military Basic Allowance for Housing (BAH) for Low-Income Housing Tax Credit (LIHTC) properties in certain areas of the United States has been around for 13 years, there is still some confusion as to which properties may benefit from this exclusion. This article will recap the basic requirements and clarify some potential confusion.

Section 3005(a) of the 2008 Housing Act amended the LIHTC program requirements to exclude the military Basic Allowance for Housing payments from income for certain qualified LIHTC buildings. A qualified building is defined as any building located:

  1. In any county which contains a qualified military installation to which the number of members of the Armed Forces assigned to units based out of such qualified military installation increased by 20% or more between December 31, 2005, and June 1, 2008; or
  2. Any counties adjacent to the county described in #1 above.

For these purposes, a “qualified military installation” means any military installation or facility that had at least 1,000 members of the Armed Forces of the United States assigned to it as of June 1, 2008.

Qualifying military bases were identified in IRS Notice 2008-79. However, the list was not an exclusive list and any qualified military installation which satisfied the percentage requirements outlined above is eligible to receive similar treatment regardless of the fact that it was not identified in the IRS Notice.

The following list identifies military installations that are deemed to be qualified military installations that satisfied the 20% population increase requirement for purposes of the exclusion of BAH in determining income for LIHTC (and some tax-exempt bond) properties. The IRS will update the list if it receives additional information indicating that other military installations should receive the same treatment. Note – owners and managers should confirm the eligibility of these locations with their Housing Finance Agency:

  • U.S. Air Force Academy, Colorado      –          Colorado Springs, Co (El Paso County with adjacent counties of Elbert, Crowley, Douglas, Fremont, Lincoln, Pueblo, and Teller).
  • Fort Shafter, HA  –          Hawaii (Honolulu County and adjacent counties of Maui and Kauai).
  • Fort Riley, KS       –          Geary & Riley Counties, KS with adjacent counties of Wabaunsee, Morris, Dickenson, Clay, Marshall, Pottawatomie and Washington.
  • Annapolis Naval Station (including U.S. Naval Academy), MD        –          located in Anne Arundel County with adjacent counties of Baltimore, Calvert, Kent, Howard, Prince George’s, Queen Anne’s and Talbot.
  • Fort Jackson, SC      –          located in Richland County, SC with adjacent counties of Kershaw, Fairfield, Sumter, Lexington, Calhoun, and Newberry.
  • Fort Bliss, TX –          located in El Paso County, with adjacent counties of Hudspeth, Dona Ana (New Mexico), and Otero (New Mexico).
  • Fort Hood, TX –          located in Bell County, with adjacent counties of McLennan, Falls, Milam, Williamson, Burnet, Lampasas, and Coryell.
  • Dam Neck Training Center Atlantic, Virginia       –          Located in Virginia Beach, with adjacent cities of Norfolk and Chesapeake; also Currituck County, NC.
  • Naval Station Bremerton, Washington     –         located in Kitsap County, with adjacent counties of Island, Snohomish, King, Pierce, Mason, and Jefferson.

Tax-exempt bond-financed properties with the LIHTC are eligible for this exclusion, but bond properties without the LIHTC are not eligible for the exclusion.